carbon management - cathay pacific’s perspective

October 2017

Prian ChanCorporate Affairs Department

Carbon Management -Cathay Pacific’s Perspective

Overview

• Cathay Pacific carbon strategy and targets

• Looking back- What we have done and how are

we performing?

• Looking ahead- How do we forecast and set

targets?

The Home Carrier of Hong Kong

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• Founded in 1946

• 144 aircraft, average age

of 7.5 years

• 23,000 people

– 6,600 outside of Hong Kong

– 3,300 cockpit crew

– 11,000 cabin crew

– 8,600 ground staff

189 destinations, 47 countries

Cathay Dragon

• Founded in 1985, joined the Cathay Pacific Group in Sept

2006

• 46 aircraft

• 3,300 people

– Outside of Hong Kong - 800; Cockpit - 500; Cabin crew - 2,000

– Ground staff (including airport staff) - 800

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53 destinations worldwide, 23 in mainland China

203 aircraft and 56 more to come

182 CX & 53 KA destinations

Founding year

1946Founding year

1985

Globally, aviation is responsible for small proportion of emissions but growing fast

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If Cathay Pacific was a country….

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Last year we operated 170,000 flights,

carried 34m passengers / 1.9m tonnes of cargo,

and emitted 17 million tonnes of carbon emissions

equivalent to ~40% of Hong Kong’s emissions(from homes, buildings, cars, waste etc)

Carbon is a priority for us and we are committed to improving our fuel efficiency

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We have a commitment to reduce CO2

emissions intensity by

2% every year

We do that with….

New aircraft Efficient operations

… and biofuels

Setting targets starts with selecting a relevant metric

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Carbon efficiency metric:

CO2 / Revenue Tonne Km (RTK)

Why this metric?

• It best represents our business operations, taking into account

passengers, cargo, routes, utilisation etc.

• Widely used in industry. In line with IATA’s metric.

• Other airlines uses variation of this metric (e.g. litres fuel / ASK)

600

650

700

750

800

850

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

CO

2/R

TK

Carbon Efficiency (CO2/RTK)

Summary of Cathay Pacific efficiency analysis (2005-2016)

-0.8%

-1.0%

Carbon efficiency by fleet type- freighters and newer fleet the most efficient

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Airbus 320

Airbus 340

Boeing 747

Airbus 330

Boeing 777

Airbus 350

744 ERF

747-8

Freighters

Passenger

Takeaways on defining efficiency metric

• Many factors drive

efficiency- choose

wisely

• Perhaps breakdown to

more granular metric

• ‘normalise’ impact from

business and other

drivers

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Forecasting Carbon Efficiency

Our approach to forecast would engage departments in the process

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• Route growth

• Market growth

• Aircraft performance

• Aircraft orders- new

aircraft

• Fuel purchasing

• New technologies e.g.

biofuels

Bottom up model- build up based on growth, fleet,

efficiency assumptions

Airline / Cargo Planning

Flight Operations

Procurement Department

Impact of business growth and fleet result in emissions increase but efficiency improvement

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Carbon Efficiency (CO2/RTK) Total Emissions (tCO2)

x%

x%

• We expect that emissions will continue to go up and efficiency will

continue to improve going forward

Conclusion: Some lessons

• Setting targets starts with choosing an

appropriate intensity metric

• Important to understand drivers influencing

targets

• Effective forecast include factoring assumptions

on those drivers and collaborating across the

company

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